Monday, June 13, 2011

Bailing Money At International Baler.

WOW! What a quarter International Baler had! To long time readers of Ragnar Is A Pirate , IBAL is no stranger (read here, here, and here). If you follow other blogs that like little companies, then you may have read these 2 write ups as well (here and here). It has long been one of my favorite stocks- so much so, that I actually felt the need to actually go and tour the facility. Finally, it is above a dollar a share, and on a ton of shares trading hands... over 39,000 when it normally has a daily volume around 2,000! For the first time in memory, the bid is above a dollar, and the ask is a whopping $1.25, and it is trading above book value.

Highlights from their most recent quarterly filing:
*A backlog of a whopping $4.055 million, which is up from $3.295 million last quarter, and 1.545 million last year. !HINT HINT! This should be really good for next quarter's earnings, as it doesn't take the company a ton of time to make and ship balers.
*Sales were up over 28% YOY.
*The deferred tax assets are now at ~$425K... It looks like they will be used up very soon.

For the last 4 quarters, this company, which, after a big run up in price today now has a market cap just north of $5 million dollars, generated ~$454K in earnings. Which, ain't bad considering that over 1/2 that amount came from the last 3 months of operation... With the company's backlog improving, things are shaping up quite nicely, especially when you consider that the company is trading just above book value, and at ~11.5x earnings. I look for year over year earnings to continue to improve next quarter, and so long as the economy doesn't derail again, the trend to continue.

Speaking of a glut of cash on hand and no debt, I won't be shocked if the company is either taken over by the Borens, a dividend is declared, or if the facility is improved. In the event that the company is taken private, it should only occur after the NOLs are used up (at this rate, less than a year). Furthermore, I would also think that it would be at a significantly higher price than we are currently trading at. In the event of the facility being improved, it would make the company a lot more profitable and more efficient (again, having been to the facility, I think that this would be a decent use of cash). If a dividend were declared, I wouldn't be upset either, as it would be a good signal to the investment community that operations are going well.

All in all, I am happy being invested in this great little company. :)

Disclosure: I am long IBAL. This is not advice of any kind. Always do a ton of your own research in regards to anything that I say, do, write, or so much as even think about.

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